Col credit suisse industrials conference final

Investor Presentation

Credit Suisse Global Industrials ConferenceD b 3 2013

© 2013 Rockwell Collins. All rights reserved.

December 3, 2013

Safe Harbor Statement

This presentation contains statements, including certain projections and business trends, that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected as a result of certain risks and uncertainties, including but not limited to the financial condition of our customers, including bankruptcies; the health of the global economy, including potential deterioration in economic and financial market conditions; the rate of recovery of g y g p ythe commercial OEM production rates and the aftermarket; the impacts of natural disasters, including operational disruption, potential supply shortages and other economic impacts; cybersecurity threats, including the potential misappropriation of assets or sensitive information, corruption of data or operational disruption; delays related to the award of domestic and international contracts; delays in customer programs; unanticipated impacts of sequestration and other provisions of the Budget Control Act of2011; the continued support for military transformation and modernization programs; potential adverse impact of oil prices on the commercial aerospace industry; the impact of terrorist events on the commercial aerospace industry; declining defense budgetscommercial aerospace industry; the impact of terrorist events on the commercial aerospace industry; declining defense budgetsresulting from budget deficits in the U.S. and abroad; changes in domestic and foreign government spending, budgetary, procurement and trade policies adverse to our businesses; market acceptance of our new and existing technologies, products and services; reliability of and customer satisfaction with our products and services; favorable outcomes on or potential cancellation or restructuring of contracts, orders or program priorities by our customers; recruitment and retention of qualified personnel; regulatory restrictions on air travel due to environmental concerns; effective negotiation of collective bargaining agreements by us and our customers; performance of our customers and subcontractors; risks inherent in development and fixed-price contracts, particularly the risk of cost overruns; risk of significant reduction to air travel or aircraft capacity beyond our forecasts; our ability to execute to our internal performance plans such as our productivity and quality improvements and cost reduction initiatives; achievement of our acquisition and related integration plans; continuing to maintain our planned effective tax rates; our ability to develop contract compliant systems and products on schedule and within anticipated cost estimates; risk of fines and penalties related to noncompliance with laws and regulations including export control and environmental regulations; risk of assetrelated to noncompliance with laws and regulations including export control and environmental regulations; risk of asset impairments; our ability to win new business and convert those orders to sales within the fiscal year in accordance with our annual operating plan; and the uncertainties of the outcome of lawsuits, claims and legal proceedings, as well as other risks and uncertainties, including but not limited to those detailed herein and from time to time in our Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof and the company assumes no obligation to update any forward-looking statement.

© 2013 Rockwell Collins. All rights reserved. 22

What we do‣ Communications

C i ti d l t i d t ‣ Navigation

‣ Automated flight control

Di l / ill

Communications and electronics products, systems and solutions for commercial aviation and military applications worldwide

2013 Sales: $4 61 Billion ‣ Displays/surveillance

‣ Aviation services

‣ Integrated electronic

2013 Sales: $4.61 Billion

52%52% 48%48%Government Commercialsolutions

‣ Information management

systems

52%52% 48%48%

Avionics Air transportAir transport‣ Simulation and training58%

Comm products24% Business & regionalBusiness & regional

Air transport50%

Air transport50%

Surface sol 10%

g46%

g46%

Wide-body IFE 4%Wide-body IFE 4%Nav products 8%


Strengths of our business

• Well positioned in long-cycle programs

• Strong customer relationships• Strong customer relationships

• Leveraged operating model utilizing shared services and common investmentsservices and common investments

• Highly exportable products

• Robust intellectual property portfolio and high barriers to entry

• Financially sound balance sheet


Government Systems

• Long-term avionics positions across a broad spectrum of platforms

• Established core capabilities in air and ground communication and navigation solutions

• Leverage commercial technologies• Leverage commercial technologies

• Growing international positions across our government portfolios


Returning to growth - Government Systems($ Millions)

Mid-to-high single digits

$2,395

2013 2014 2015 2016 20172013 2014 2015 2016 2017

Key Areas of Growth:• Tankers & Transports

Market Outlook:• Sequestration continues to impact DOD funding

• Rotary Wing • Networked Communication• Next Gen GPS

T ti S t

• International growth• Hardware programs transitioning to production• 2015 sales about flat with 2014

L i l di it th ft 2015


• Targeting Systems

6

• Low-single digit growth after 2015

Commercial Systems

• Growing share in air transport through increased standard positionspositions

• Increasing business jet positions in the mid to heavy jetsin the mid to heavy jets

• International growth through t d iti ith i captured positions with emerging

international OEMs

Di d t tf li • Diverse product portfolio

• Supplier of choice for i f ti bl d i ft


information-enabled aircraft

7

Accelerating growth – Commercial Systems($ Millions)

$2 215

Mid single-digit$2,215 digit

2013 2014 2015 2016 2017

Market Outlook: Key Areas of Growth:• Robust air transport OEM backlogs• International expansion• Lagging business jet recovery

y

• Air Transport: 787, A350, CSeries, 737 MAX

• Business & Regional: Legacy 500 and 450 Learjet 85 Global


• New market entries with increased content• Strong aftermarket demand

8

500 and 450, Learjet 85, Global 7000/8000, MRJ, ARJ-21, 5 unannounced platforms

FY 2014 guidance

Total Sales $4.5B to $4.6B

Total Segment Operating Margins 21% to 22%

Earnings Per Share $4.30 to $4.50g $ $

Cash Provided by Operating Activities $550M to $650M

Research & Development Investment About $950M

Capital Expenditures About $140MCapital Expenditures About $140M

This guidance range excludes the planned acquisition of ARINC, which is expected to close shortly after receiving regulatory approval. Guidance ranges will be updated after the transaction has closed.


g g y pp g p

9

Aviation information management and ARINC


Information management overview

Flight Management System, passenger entertainment

On-board computer / server C t

Apps

Router

Tablets, laptopsOn board computer / server / flight computer

Wi-Fi, hot spot Smart router

Computer

, p

Cable / cellular VHF / UHF / SATCOMConnectivity

Air Traffic Control / Airline Net / Secure Networks / internet open

Networkcorporate intranet

Information management in aviation is similar to common every day computing

Aviation charts and maps,flight planning, cabin services

Content & Services


Information management in aviation is similar to common every day computing yet tends to be highly tailored to accommodate unique needs and constraints

11

Aviation information management outlook

Global traffic volume and safety/security requirements driving airspace modernization• Global traffic volume and safety/security requirements driving airspace modernization

• Operator, crew and passenger needs for information access on/off the aircraft driving advances in avionics/connectivity

• Aircraft becoming a mobile data center node on the highly secure global aviation network

• Ground systems that provide operational monitoring and management will be modernized to keep pace with aircraft, airports, and airspace

• Strong need for trusted suppliers of end-to-end solutions to seamlessly connect all the parts in a secure and cost effective manner

Rockwell Collins has a vision to be a leader in


aviation information management

Information enablement in commercial aviation

Double-digit information enablement market growth:Double digit information enablement market growth:• Increasing fleet size• Increasing percentage of information enabled aircraft• Increasing applications and services

80%

84,700 (1)activecommercialaircraft

information enabled

information-enabled aircraft“Smart Aircraft”

• Advanced avionics• Connectivity & services• Apps & content S it

33,800 (1)activecommercialaircraft

2030202020102000

• Security15-20% information enabled


(1) – Air transport, regional, and business aviation aircraft.

13

Information management in aviation

Aircraft Computing EnvironmentAircraft Computing Environment

• Highly secure and regulated

• Mission critical dependability

E i l i h d li i

Rockwell Collins Strength

• Environmental, weight, and power limits

• Complex connectivity requirements

Aviation Industry Ground SystemsAviation Industry Ground Systems

• Highly secure and regulated

• Mission critical dependability ARINCStrength

• Interoperable with proprietary networks

• Global network coverage footprint

• Domain specific content and services

Strength

Integrated End-to-End SolutionsCombinedStrength

Rockwell Collins and ARINC combination creates customer and shareholder value

14© 2013 Rockwell Collins. All rights reserved.

by addressing currently unmet need for integrated end-to-end solutions

ARINC synergies overview

• Significant synergy opportunities given complementary end markets and customers:– End-to end integrated solutionsEnd to end integrated solutions

– Combined systems and services

– Platform for profitable growth

• Key revenue synergies:• Key revenue synergies:– Accelerated expansion of

GlobaLink services– ARINC Direct and Rockwell Collins

Ascend Flight Services sce d g t Se ces– Business aviation connectivity services– Global weather solutions– Airline trusted application hosting

• Key cost synergies: – Corporate function consolidations– Flight services optimization


ARINC financial overview

• 2014 ARINC expectations:– Expect 2014 EPS to be about neutral including the

gain on the sale of Kaiser Optical Systems Incgain on the sale of Kaiser Optical Systems, Inc.

– Expect deal costs to be $10 - $15 million

• Long-term ARINC expectations:– Sales growth without synergies in high-single digits

– EBITDA margins expanding to greater than 20%

– ARINC expected to initially increase Rockwell Collins’ cash flow by about 10% and accelerate thereafter

– Revenue synergies are expected to expand ARINC sales growth to d bl di it d f th i EBITDA idouble-digits and further improve EBITDA margins


Information management summary

• Double-digit growth over the next decade

• Rockwell Collins is uniquely positioned

• ARINC accelerates our penetration in information management services

• Increases Rockwell Collins pro forma commercial revenue psplit to 54% of total sales


Rockwell Collins value proposition

• Accelerating growth

• Margin expansion as revenue grows

• Accelerating cash flow generation • Accelerating cash flow generation

• EPS growth in excess of sales growthgrowth

Focused on shareowner value creation



Date post:	22-Apr-2015
Category:	Business
Upload:	rockwellcollins
View:	8,862 times
Download:	1 times